Fillichio v. Department of Revenue, 34858

• Decision Date: 26 November 1958
• Docket Number: No. 34858,34858
• Citation: 155 N.E.2d 3,15 Ill.2d 327
• Parties: Anthony FILLICHIO et al., d/b/a Austin Liquor Marts, Appellees, v. The DEPARTMENT OF REVENUE, Appellant.
• Court: Illinois Supreme Court

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155 N.E.2d 3 15 Ill.2d 327 Anthony FILLICHIO et al., d/b/a Austin Liquor Marts, Appellees,
v.
The DEPARTMENT OF REVENUE, Appellant. No. 34858. Supreme Court of Illinois. Nov. 26, 1958.
Rehearing Denied Jan. 22, 1959.

[15 Ill.2d 328]

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Latham Castle, Atty. Gen. (William C. Wines, Raymond S. Sarnow and A. Zola Groves, Chicago, of counsel), for appellant.

Louis Wilson, Chicago, for appellees.

DAILY, Chief Justice.

Appellant, the Department of Revenue of the State of Illinois, appeals from a judgment of the circuit court of Cook County which, in an administrative review proceeding, reversed a decision of the Department that appellees, Anthony and Bennie Fillichio, doing business as Austin Liquor Marts, were subject to a deficiency assessment and penalty under the Retailers' Occupation Tax Act Ill.Rev.Stat. 1951, chap. 120, par. 440 et seq. The revenue being involved, we have jurisdiction on direct appeal.

During the period from January 1, 1952, to July 31, 1953, appellees were engaged as partners in the occupation of selling liquor at retail in the city of Chicago. Both package liquor and drinks for consumption on the premises were sold, with all sales being made from four store locations established by the partners between January and August, 1952. The partnership filed tax returns with the Department as required by the Retailers' Occupation Tax Act and, for the 19-month period in question, reported gross sales of $265,278.98, upon which tax was paid. Pursuant to authority conferred by section 4 of the act (par. 443), the Department conducted an investigation, concluded that [15 Ill.2d 329] the gross receipts had been understated, corrected the returns filed and, on November 9, 1953, gave appellees notice of a proposed deficiency assessment of $12,295.06, plus a penalty of $1,295.51, or a total of $14,250.57. Appellees protested

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the proposed assessment and requested a hearing, which was granted.

After several continuances the hearing commenced on May 13, 1954. Neither appellee was present but their counsel appeared. To establish its proposed assessment the Department introduced the testimony of Walter V. Lesniak, a special auditor who was assigned to audit appellees' books and records shortly after July 31, 1953. In detailing how the books were never made available to him, Lesniak testified that his first contact was with Bennie Fillichio who stated that his brother, Anthony Fillichio, was in charge of the records, that the latter was busy at another store, and that the witness should come back some other time. Lesniak later met with Anthony by appointment and was told that more time would be needed because the records were not ready and were in the hands of one Staats, an auditor employed by the partnership. The latter, who was contacted only after repeated efforts, confirmed that he had the records and advised Lesniak he would telephone when they were ready. When Staats failed to call, or to respond to further calls, Lesniak took the matter up with his superior who directed him to proceed and to base an assessment on the best information he could get. Thereafter, Lesniak visited each of the four liquor stores and estimated the cost value of their combined liquor inventories as being $39,000. Further estimating, on the basis of experience, that such inventory would be sold at a mark up of 25 per cent over cost, a sum totalling $9,750, Lesniak calculated that the total monthly receipts of the four stores would be $48,750. By comparing his calculation of monthly receipts with those actually reported by the appellees, he concluded there was additional tax liability and a penalty [15 Ill.2d 330] as previously set forth. With Lesniak's testimony as a foundation, his written report and documentary proof of the administrative actions, taken by the Department to correct appellees' returns and to effect the deficiency assessment, were also admitted in evidence.

Appellees' counsel did not cross-examine Lesniak or submit proof...